Benefit Cap

Lord German Excerpts

Wednesday 2nd July 2014 Lords Chamber

[Lord Freud]

There are two ways in which the cap works to incentivise people to go to work. One is that people who qualify for working tax credit are exempt from it, but there is another way, in that anyone doing even small amounts of work will be capped by a lesser amount because it serves to reduce the level of the cap and effectively allows them to keep their earnings. Clearly, one always has to be very careful to distinguish causation from correlation, but in a survey conducted by MORI a quarter of capped claimants said that they had looked for work because of the cap and 45% said that they would look for work in the next 12 months because of it.

[Lord German (LD)]

My Lords, the dignity of work is probably the best way in which people can escape from the cap. However, the figures to which my noble friend has just referred indicate only a trend in the direction of travel. From the figures which the DWP is now collecting, will the Minister have formed a view by the end of this coming recess as to the whole period? Will he know many people have moved into work and whether the trend that we have seen in the initial figures has been carried through, so that we can say that this initiative has really borne fruit into work?

[Lord Freud]

The cap is doing quite a lot of things. It has an influence on the people who are capped but it also sends out a message. The total number of people who have been capped at one time or another stands at just over 42,000; the current number is just over 27,000. A substantial proportion of those who have moved out of the cap, which they might do for various reasons, have gone into work and taken working tax credit. Others will have taken advantage of the effect that I have just referred to, whereby doing even small amounts of work reduces their cap.